2024-01-03 02:34:00
Mr. Poon Panitchpibun, money market strategist, Krungthai GLOBAL MARKETS, Krung Thai Bank, revealed that the baht opened this morning at 34.29 baht per dollar, “depreciating” from the previous day’s closing level of 34.13 baht per dollar. During the previous night The baht fluctuated and weakened as we had assessed. that the momentum of the baht’s appreciation will begin to slow down and there is a chance of fluctuation and depreciation (Oscillating in the range of 34.12-34.35 baht per dollar)
There are factors that pressure the depreciation from the risk-taking situation of the financial market as a whole, which encourages the dollar to gradually strengthen. In addition, the increase in the US 10-year bond yield is close to 4.00%, which One may come from adjusting the holding position before receiving important US economic data reports. There is even more pressure. Gold prices dropped back into the short-term support zone again. As a result, some market players may purchase gold in the said zone. And such transaction flows also contribute to pressure on the baht to depreciate.
The atmosphere in the US stock market Reversed back to being in a risk-off state amidst profit-taking of large tech stocks, especially Apple -3.6%, which dropped sharply from a reduction in investment attractiveness by market analysts. In addition, A gradual rebound of the US 10-year bond yield in the period before the market received important US economic data reports. There was also pressure on tech stocks and growth style stocks, causing the overall Nasdaq tech stock index to plummet -1.63%, while the S&P500 index closed the market -0.57%.
As for the European stock market, the STOXX600 index turned around and dropped -0.11%, pressured by the pressure to sell tech stocks and growth style stocks such as ASML -2.6% after long-term bond yields gradually increased. In addition, the European stock market also Pressured by sales of shares in the brand-name product group Dior -3.0% amid concerns about the prospect of Chinese economic recovery. From the latest PMI index report for the manufacturing and service sectors that came out worse than expected.
On the bond market side, the US 10-year bond yield gradually rose to 3.95%. Market players may adjust their bond holding status somewhat. Before gradually receiving important US economic data reports This may cause market players to gradually adjust their views on the Fed interest rate trend. If the US economic data report Came out better than expected consistent with our original view that Should be wary of the risk that the US 10-year bond yield may skyrocket. If the US economic data report came out better than expected, however, the trend of the US economy slowing down Makes us think that Bond yields have entered a downtrend. But there is still some fluctuation. Therefore we still recommend that Market players should focus on Buy on Dip strategies and not chase prices. By trying to take into account the break-even point or break-even when considering the total return or total return that will be obtained from holding bonds.
On the currency market side The atmosphere in the financial market has turned to be in a risk-off state, which has resulted in the overall The dollar gradually strengthened against major currencies. The dollar index (DXY) has risen close to the level of 102.2 points (oscillating within a range of 101.6-102.3 points) as for the price of gold. The rise of both the dollar and the US 10-year bond yield has pressured the price of gold (COMEX gold contract for delivery in February) to gradually decline. Near the support zone 2,060-2,070 dollars per ounce. As a result, some market players may gradually buy gold in those zones. This transaction flow also contributed to some pressure on the baht’s volatility to depreciate last night.
For today, market players will wait for reports of important US economic data, such as the Industrial Manufacturing Purchasing Managers Index by ISM (Manufacturing PMI) for December, as well as the report on the number of job openings (Job Openings). In addition, during Early on Thursday morning, around 2:00 a.m. in Thailand. The market will be watching the latest FOMC Meeting Minutes to help assess the outlook for the Fed’s monetary policy.
and in addition to the aforementioned economic data reports Market players will be watching the statements of Fed officials. For consideration of the Fed interest rate trend as well.
For the trend of the baht value We evaluate that The baht may face the risk of fluctuations and depreciation. After the dollar began to reverse direction and gradually strengthened. As for the gold price, it dropped closer to the important support zone. which factors will determine that fate Will the baht fluctuate and weaken and test the important resistance zone of 34.50 baht per dollar or not? It may depend on important US economic data reports. If the ISM PMI index in the manufacturing sector or the number of job openings Came out better than expected Reflecting the picture of the US economy that is still strong It may further support the return of the dollar to strengthen. along with an increase to test the 4% zone of the US 10-year bond yield after market players may begin to gradually reduce their expectations for interest rate cuts from the Fed this year.
In addition, the market is closed to risk. It came back at the time when the SET index rose to test the resistance zone. There is a risk that some foreign investors may start selling more stocks to take profits. The same is true on the Bond side. An increase in US and European bond yields may put pressure on Thai bond yields to rise accordingly. and put pressure on the fund flow of foreign investors in the Thai bond market.
However, we would estimate that The baht may not depreciate very far from the important resistance zone. This is because some market players may be waiting for the right moment to gradually sell dollars. Including waiting to increase the Long THB position (seeing that the baht is likely to strengthen this year). As for the baht support zone, we think that the zone is 34.00-34.10 baht per dollar. It is still a support zone that the baht may not be able to strengthen past easily. Until there are new factors Come in and provide clear support.
During this period, we found that the volatility of the baht remained higher than its historical average. (looking at the weekly baht frame) makes us maintain our recommendation that Entrepreneurs should use a variety of hedging tools, such as Options, to increase efficiency in hedging against exchange rate risk. And in addition to using the aforementioned tools Choosing to transact in local currency is another interesting way to manage exchange rate risk. Entrepreneurs should compare transaction costs and hedging plans before making every decision.
Looking at the baht today It is expected to be at the level of 34.10-34.40 baht/dollar.
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